Understanding Circuit Breaker Policy:

A circuit breaker is a design pattern used to detect failures and prevent an application from continually trying to execute a failing operation. In this case, it will help improve response time and reduce demand on the downstream API.

The specified configuration includes conditions for opening, half-opening, and closing the circuit based on error rates over time:

Circuit Open: Triggered if there are more than 10 errors per minute for three consecutive minutes.

Circuit Half-Open: The circuit transitions to half-open if there is one error per minute.

Circuit Closed: The circuit closes if the error rate is less than one error per minute for five minutes.

Evaluating the Options:

Option A: Creating a custom policy with template expressions could work, but it would require custom development. Since the Anypoint Platform already has a Circuit Breaker policy available, this would be a less efficient and more complex solution.

Option B: Anypoint Monitoring alerts can be used for monitoring the API, but they do not provide circuit-breaking functionality. Additionally, implementing a retry strategy for the half-open state is not sufficient to achieve the required circuit breaker behavior.

Option C (Correct Answer): Adding the Circuit Breaker policy to the API instance on Anypoint Platform allows you to set up circuit-breaking conditions directly. This approach uses the built-in Circuit Breaker policy, where you can configure parameters such as error thresholds and time intervals to match the requirements. This solution is efficient, reliable, and leverages Anypoint’s out-of-the-box capabilities.

Option D: Implementing the strategy within a Mule application with a YAML configuration could be complex and less manageable. Additionally, it does not leverage Anypoint Platform’s built-in Circuit Breaker policy, which is more suited to this scenario.

Conclusion:

Option C is the correct choice, as it leverages Anypoint Platform’s Circuit Breaker policy. This solution allows for configuring thresholds and time intervals as specified, improving response time and reducing demand on the downstream API while utilizing Anypoint's managed policy feature.

Refer to MuleSoft’s documentation on implementing the Circuit Breaker policy in API Manager for detailed configuration guidance.